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BP Statistical Review of World Energy 2013

Last week I attended Mark Finley’s presentation in Chicago of BP’s Statistical Review of World Energy for this year. In his role as General Manager of Global Energy Markets at BP, Mark is responsible for this annual analytical survey of world energy production, consumption, and trends. He’s an outstanding economist whose presentations are a master class in public communication of quantitative analyses, so attending his presentation was a real treat for me.

The US recorded the world’s highest growth in production of both oil and natural gas in 2012, on the back of increasing production of unconventional hydrocarbons such as tight oil, an example of the increasing diversity of energy sources as the global market continues to adapt, innovate and evolve. With rising natural gas output driving prices lower in the US, natural gas displaced coal in power generation, causing the US to experience the largest decline of coal consumption in the world.

Elsewhere, 2012 saw the largest annual decline in world nuclear output. In Japan, where nuclear power generation all but disappeared after 2011’s Fukushima accident, higher imports of fossil fuels including liquefied natural gas (LNG) ‘kept the lights on’. In Europe, where gas prices were higher than in the US, power generators took the opposite course from the US, and substituted coal for gas.

A few of Mark’s insights that aren’t reflected fully in the graphs and data really struck me. Not surprisingly, he talked quite a bit about the increase in oil and natural gas production in the US due to shale, and this change has led to a couple of interesting trade patterns. One is the reduction of US oil imports by one-third in the past five years, and the shift in consumption from the US to China. That’s the “national security-reduce Middle East imports” desired outcome from shale oil, right? Not exactly — oil is not a homogeneous product, and it turns out that North American shale oil is most similar in weight and composition to the oil in Africa, not the Middle East. So the US imports of African oil have fallen, and Chinese imports of African (and other) oil have risen. BP also estimates that China has increased its oil inventories by more than all of the OECD country inventory increases combined.

One reason for the increase in Asian oil imports is the increase in automobile ownership in China and India. The majority of new car sales in 2012 occurred in emerging economies, with much of that activity occurring in China and India.

There were other fascinating insights in Mark’s analysis, but I’ll leave it there for a Friday afternoon!

I also recommend the interactive energy charting tool accompanying the Review — it uses the historical data and generates comparative regional charts elegantly and effectively. You can also export a particular graph, the data underlying the graph, and/or a spreadsheet with all of the data in the Review. I had fun playing around with the natural gas price history graph, which you can scroll through by year and see year-by-year how the price changes, as well as seeing in 2012 the large price difference between US/Canada and Europe/Japan.